Attention: This is a BOOK review, not an attempt to engage in a political argument! I can understand the other thread being moved to "Economy" and merged with a different thread since the original thread did not START with a book review, but I added one about half a dozen posts into it, and this is that same review. Consequently, I would appreciate it if the review could stand instead of being buried on post #316 of another thread where nobody could possibly find a review of the book if that's what they were looking for.

I suppose that anyone who knows of Paul Krugman knows he's a columnist for economic and political matters (they're often interrelated) at the NYT, an unabashed Keynesian economist, an author of several books, and a recent recipient of a Nobel Prize in economics in 2008, as well as an occasional TV pundit. He's also routinely denounced by conservatives for many, if not most, of his positions, which is a shame considering that, regarding economic policy, he's routinely taken on Democrats as well as Republicans for years simply because he dislikes bad economic policy, regardless of which political party is pushing it. I get the impression that's because he believes that, too often, public policy is championed for reasons other than its merits. For example, sometimes people push certain policies because they benefit one group or segment of society. Sometimes it's because it's an ideological belief. Sometimes it's simply a lack of a working knowledge of both economics and the historical record of what has worked and what didn't work in previous recessions.

While I've read the occasional column by Krugman, I had never read any of his books. This particular book was just published (April 30, 2012) and it seemed timely considering the current ongoing debate on how to revive the economy. I was also struck by the title (which I don't particular like) because I perceived it as essentially a plea for attention, or at least for serious consideration. But Krugman's title is meant more to describe the human toll that the economic downturn is having on families as opposed to a textbook definition of the state of the economy.

In the book Krugman offers an explanation of our current economic crisis, how we got here, and how best to get out of it. In fact, he states several times that we really don't have to be going through this extended economic downturn at all. He offers historical perspective going back to before the great depression, and an analysis of differing approaches and offers his ideas for how best to solve our current economic problems.

The book is intentionally written for the layperson. While there are a few graphs and charts (I would have preferred more, frankly), there's no math or complicated economic theorems to make the eyes glaze over. It's basically written in a very straightforward style.

Of course Krugman discusses the concept of austerity and the notion of cutting back on national debt immediately as a way of addressing our current problems. And needless to say, Krugman is highly critical of that approach. He offers several example of how and why those policies would have the exact opposite of the intended consequences. Said plainly, Krugman states that such policies will only serve to dig us into a deeper hole. (But that doesn't mean our country won't try it anyway, does it?).

That's not to say that Krugman doesn't think that our huge debt problem needs to be addressed. He does. He just doesn't think it's anywhere near being our most pressing problem, and he offers economic numbers to support his case. And like I said earlier, he says that attacking the debt problem at the wrong time (now) will only make our worst problem (the anemic recovery) worse still.

Krugman also tackles a number of economic myths, both American and European, which he says are getting in the way of solving the economic problems simply because the decision makers don't have an accurate understanding of what the problem is. And as everyone knows, if you don't identify the core problem and how and why it developed in the first place, you're probably not going to make any progress in solving the problem unless blind luck or providence lend a hand.

One of the European myths Krugman tackles is that all the European countries are in trouble because of profligate spending. Untrue, he says. While some countries like Greece have caused many of their own problems, other countries like Spain had actually been paying down their debt relative to GDP for years when the economic crisis struck. In other words, it was the economic crisis which led to the debt crisis, not the other way around.

The one part of the book that I found particular surprising (don't ask me why) was Krugman's chapter on Austerians (Ch 11) where he gives a number of reasons why people embrace austerity. Of course ignorance of economics and history both play a role. Krugman also makes a good case that there's an emotional desire to 'punish bad nations' by making them suffer for their perceived economic sins despite the fact that they're often not at fault for the problem and that it's a counterproductive approach. But more disturbing still is Krugman's belief that powerful people have an economic interest in preventing a recovery even though a recovery would also help them as well as everyone else. If true, I guess we should never underestimate the possibility that powerful people may have suspect motives when their self-interest conflicts with the common good.

Krugman also discusses why the European Union's adoption of the Euro as a common currency is causing so many problems for Europe. For example, he points out that if all the countries still had their own currencies, countries like Greece could devalue their currency relative to the rest of Europe, and that's now that's not an option for any country that uses the Euro.

Despite all the other reasons to read this book, it's worth reading if for no other reason than to better understand the nature of the liquidity trap in which we currently find ourselves, and that's tackled very early in the book.

It's only 238 pp, and it's a great primer in understanding our current economic doldrums.

So it's not the debt itself, it's having the debt during a recession? Is THAT what he said?

If so then the solution would be to have no debt ever since you don't know when the recessions are gonna' be?

Right?

Click to expand...

No, that's not it.

One of the points of focusing on growing the economy first (as opposed to trying to pay down the debt even as the economy may be contracting) is because the debt goes down (as opposed to going up) as a percentage of GDP.

Granny still waitin' fer her 2nd stimulus check...The $64,000 Question: How Much Has Debt Increased Per Taxpayer Under Obama?July 12, 2012 - The national debt has now increased by more than $64,000 per federal taxpayer since Barack Obama was inaugurated president.

At the close of business on Jan. 20, 2009, according to the U.S. Treasury, the total debt of the federal government was $10,626,877,048,913.08. By the close of business on July 10, 2012, that debt had climbed to $15,885,854,755,351.47an increase of $5,258,977,706,438.39. In Statistics of Income2009 Individual Income Tax Returns, which was published this year and is the Internal Revenue Services most recent statistical report on individual income tax data, the IRS reported that there were 81,890,189 tax returns filed in 2009 that reported taxable income. If each of these 81,890,189 federal taxpayers were given responsibility for paying off an equal share of the new federal debt added since Obama was inaugurated, they would each need to pay about $64,219.88.

If each of these 81,890,189 federal taxpayers were given responsibility for paying off an equal share of the entire federal debt of $15,885,854,755,351.47, they would each need to pay about $193,989.72 A Republican majority was elected to the House of Representatives in November 2010 and took office in January 2011. Because the previous Congress had passed a continuing resolution that kept the federal government funded until March 4, 2011, the Republican-majority House did not gain legislative responsibility over federal spending until that date. Article 1, Section 9, Clause 7 of the Constitution says: No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law. A law appropriating money cannot be enacted unless it is approved by the House.

Since the Republican-majority in the House effectively gained its constitutional veto over federal spending, the federal government has been funded under a series of spending deals negotiated between the House Republican leadership, the Senate Democratic leadership and President Obama. At the close of business on March 4, 2011, when the first spending deal approved by the Republican House leaders took effect, the total debt of the federal government was $14,182,627,184,881.03. Since then, it has increased by $1,703,227,570,470.44. That $1,703,227,570,470.44 increase in the debt while the Republican-majority House had responsibility for spending bills equals $20,798.92 for each of the 81,890,189 taxpayers who paid federal taxes in 2009.

The median household income in the United States in 2009, according to the Census Bureau, was $49,777. That means the median household would have needed to work all of one year and then the first 106 days of another year and then give all of their earnings from that time period to the federal government just to pay off the $64,219.88 in new federal debt per taxpayer piled up since Obamas inauguration. To pay off the federal governments total debt of $193,989.72 per taxpayer, the median household making $49,777 in 2009 would need to give the government all of its earnings for a period of almost four years (3.897 years).

Americans Will Work More than 6 Months to Pay Cost of Gov't in 2012July 12, 2012  This year, Americans have to work until July 15 to pay for the burden of government, more than six months.

In a new report, Americans for Tax Reform (ATR) has calculated that Americans will spend a total of 197 days toiling to pay for the cost of government.

"Cost of Government Day is the date of the calendar year on which the average American worker has earned enough gross income to pay off his or her share of the spending and regulatory burden imposed by government at the federal, state and local levels," reads the report.

The report, Cost of Government Day, shows that Americans will work 88 days to pay for federal spending; 40 days for state and local spending; and 69 days for total regulatory costs.

"From a different perspective, the cost of government makes up 54.0 percent of annual gross domestic product (GDP)," reads the report. "What's more, the largest tax hike in the nation's history is scheduled to take place at the end of 2012 unless Congress acts to protect taxpayers. If this tax increase is allowed to hit, COGD [Cost of Government Day] could permanently be pushed back into August and beyond."

6 trillion more in debt since 2008...Debt Up $6.35T Since Ryan Predicted--in 2008-U.S. Was Headed Toward BankruptcyAugust 11, 2012 : Rep. Paul Ryan, whom Republican presidential candidate Mitt Romney has picked as his running mate, told CNSNews.com four years ago, in August 2008, that the U.S. was heading toward bankruptcy on the fiscal path it was then following and that it would be &#8220;mindboggling&#8221; to make the problem worse by adding the sort of health-care plan that then-Sen. Barack Obama was advocating in his presidential campaign.

CNSNews.com asked Ryan: &#8220;If our country, if the federal government of the United States, stays on the fiscal path it is currently following, is the government going to go bankrupt down the road?" &#8220;Yes. We know that for a fact,&#8221; said Ryan. &#8220;All the actuaries, all the objective score-keepers of the federal government are predicting this. So, this much we know. What we know is our government is growing at an unsustainable pace and it will overwhelm our economy&#8217;s ability to pay the bills.&#8221; Since CNSNews.com first published Ryan making this prediction on Aug. 4, 2008, the debt of the federal government has grown by $6.35 trillion--rising 66 percent, from $9,565,042,361,845.53 then to $15,915,814,457,919.46 now.

Ryan then pointed out that estimates by the Government Accountability Office at that time indicated that the U.S. government already faced $53 trillion in unfunded liability to pay the promises it had made through entitlement programs, including Social Security, Medicare and Medicaid. Each year the government put off dealing with these problems, Ryan said, the unfunded liabilities would increase by $3 trillion. To pay for these government promises without reforming the entitlement programs themselves, Ryan explained, would require imposing massive tax increases on future generations of Americans.

Ryan said he had asked the Congressional Budget Office to calcuate what the tax rates would need to be on Americans of his childrens&#8217; generation to pay for the entitlement promises the government had already made. &#8220;Well, what they told me was really startling,&#8221; said Ryan. &#8220;They said that the current low rate, the 10 percent bracket for low-income Americans, would have to go up to 25 percent. The middle-income tax rates for middle-income Americans would have to go up to 66 percent. And the top rate, which is what small businesses pay, would have to go up to 88 percent. Those would be the tax rates you would have to if you wanted to tax your way out of this problem. And if you did that, all experts conclude you would literally crash the American economy.&#8221;

If we continued down the fiscal road we were on, Ryan said, America would be bankrupted and the children and grandchildren of his generation would be forced into a lower standard of living than Americans have enjoyed in the past. &#8220;What is happening is that these three entitlement programs--Medicare, Medicaid and Social Security&#8212;are going to basically to crowd out the rest of the federal budget,&#8221; said Ryan. &#8220;In about 30 years, they consume 100 percent of the budget. Right now, entitlements are about 60 percent of the federal budget. In about 20 to 30 years, the estimates are that they crowd out 100 percent of the federal budget.

Obama Requests $542 Million In Housing Aid for Drug AddictsAugust 9, 2012 -- President Barack Obama has requested over half-a-billion dollars for Department of Housing and Urban Development (HUD) programs that provide housing assistance to homeless or HIV-positive people in drug treatment.

For the Fiscal Year 2013 National Drug Control budget, Obama has requested $25.6 billion, including $542.4 million to fund HUD programs that provide housing to individuals in drug treatment, according to the White House Office of National Drug Control Policy (ONDCP), which is charged with developing that budget. According to the ONDCP, the requested FY 2013 budget will &#8220;reduce drug use and its consequences in the United States.&#8221; (The fiscal year 2013 runs from Oct. 1, 2012 to Sept. 30, 2013.) The $542.4 million in drug control funding for HUD marks an estimated 18 percent increase of $96.4 million over the FY 2012 enacted level of $446 million. Specifically, the nearly half-billion dollars in FY 2013 taxpayer-funds will be used to support programs that provide housing assistance under the Community Planning and Development Program to people with AIDS and homeless persons, a HUD spokesperson explained in an e-mail to CNSNews.com.

The drug control funding for HUD is used by the Community Planning and Development Program component to support, specifically, two housing assistance initiatives: The Housing Opportunities for Persons with AIDS (HOPWA) and the Continuum of Care-homeless assistance programs, Jereon Brown, a HUD spokesperson, told CNSNews.com. According to Brown, the HOPWA &#8220;provides critical resources that reduce homelessness and provide affordable housing for economically vulnerable households who are living with and are often disabled by HIV infection, poverty, and co-occurring chronic illnesses.&#8221; The Continuum of Care programs for the homeless are &#8220;designed to provide housing and supportive services on a long-term basis for homeless persons with disabilities (primarily those with serious mental illness, chronic problems with alcohol and/or drugs, and AIDS or related diseases),&#8221; added the spokesperson. &#8220;With 28 percent of the persons using housing under these programs having a demonstrated substance-use disorder, the Strategy specifically calls for programs to prevent homelessness as a step toward recovery from addiction. Finding stable and affordable housing is among the most difficult barriers for individuals in recovery to overcome.&#8221;

HUD &#8220;provides housing for those in drug-treatment programs,&#8221; said Brown when CNSNews.com asked whether the department also funds drug treatment given to people receiving assistance under HOPWA and Continuum of Care. The White House Office of National Drug Control Policy (ONDCP) is charged with developing the National Drug Control Budget, which is aimed at fighting the war against drugs in the United States through treatment and enforcement. The ONCDP represents the executive branch&#8217;s drug control policies. In a July 6 report on the president&#8217;s latest drug control strategy, the non-partisan Government Accountability Office (GAO) highlighted that, &#8220;ONDCP provides advice and government-wide oversight of drug programs and is responsible for coordinating drug control activities, including federal drug abuse prevention and treatment programs, and related funding across the federal government.&#8221;

The &#8220;ONDCP is required annually to develop the National Drug Control Strategy (Strategy), which sets forth a plan to reduce illicit drug use through prevention, treatment, and law enforcement programs, and to develop a Drug Control Budget for implementing the Strategy,&#8221; stated the GAO. Most of the drug control funding for federal drug interdiction, enforcement, treatment, and prevention programs are handled by the Department of Heath and Human Services, the Department of Justice, and the Department of Education. In its FY 2013 Drug Control Budget request, the White House is requesting about $9.2 billion for treatment, $1.4 billion for prevention, $9.4 billion for domestic law enforcement, $3.7 billion for interdiction, and $1.2 billion for international efforts. According to the latest federal data, the economic impact that illegal drug use has on the United States, including the cost of crime, health care, and loss of productivity, was estimated to be at more than $193 billion in 2007.

Krugman is an idiot! - Famous Paul Krugman quotes from 2001 as he was begging the Fed to create the housing bubble.

- Die Zeit, Germany: (February 2001) - During phases of weak growth there are always those who say that lower interest rates will not help. They overlook the fact that low interest rates act through several channels. For instance, more housing is built, which expands the building sector. You must ask the opposite question: why in the world shouldnt you lower interest rates?

- New York Times: (May 2, 2001) - "Ive always favored the let-bygones-be-bygones view over the crime-and-punishment view. That is, Ive always believed that a speculative bubble need not lead to a recession, as long as interest rates are cut quickly enough to stimulate alternative investments. But I had to face the fact that speculative bubbles usually are followed by recessions. My excuse has been that this was because the policy makers moved too slowly  that central banks were typically too slow to cut interest rates in the face of a burst bubble, giving the downturn time to build up a lot of momentum. That was why I, like many others, was frustrated at the smallish cut at the last Federal Open Market Committee meeting: I was pretty sure that Alan Greenspan had the tools to prevent a disastrous recession, but worried that he might be getting behind the curve.

However, lets give credit where credit is due: Mr. Greenspan has cut rates since then. And while some of us may have been urging him to move even faster, the Feds four interest-rate cuts since the slowdown became apparent represent an unusually aggressive response by historical standards. Its still not clear that Mr. Greenspan has caught up with the curve  lets have at least one more rate cut, please  but the interest-rate cuts do, cross your fingers, seem to be having an effect.

If we succeed in avoiding recession, this will mark a big win for let- bygones-be-bygones, and a big loss for crime-and-punishment. And that will be very good news not just for this business cycle, but for business cycles to come."

- CNN: (July 18, 2001) - KRUGMAN: I think frankly its got to be  business investment is not going to be the driving force in this recovery. It has to come from things like housing, things that have not been (UNINTELLIGIBLE).

DOBBS: We see, Paul, housing at near record levels, we see automobile purchases near record levels. The consumer is still very much in this economy. Can he or she  or I should say he and she, can they bring back this economy?

KRUGMAN: Well, as far as the arithmetic goes, yes, it is possible. Will the Fed cut interest rates enough? Will long-term rates fall enough to get the consumer, get the housing sector there in time? We dont know

- CNN: (August 8th, 2001) - KRUGMAN: Im a little depressed. You know, inventories, probably thats over, the inventory slump. But you look at the things that could drive a recovery, business investment, nothing happening. Housing, long-term rates havent fallen enough to produce a boom there. The trade balance is going to get worst before it gets better because the dollar is still very strong. Its not a happy picture.

- New York Times: (August 14, 2001) - Consumers, who already have low savings and high debt, probably cant contribute much. But housing, which is highly sensitive to interest rates, could help lead a recovery . But there has been a peculiar disconnect between Fed policy and the financial variables that affect housing and trade. Housing demand depends on long-term rather than short-term interest rates  and though the Fed has cut short rates from 6.5 to 3.75 percent since the beginning of the year, the 10-year rate is slightly higher than it was on Jan. 1 . Sooner or later, of course, investors will realize that 2001 isnt 1998. When they do, mortgage rates and the dollar will come way down, and the conditions for a recovery led by housing and exports will be in place.

- New York Times: (Sept. 14, 2001) - The broken-window fallacy by professor Paul Krugman after 9/11: "Ghastly as it may seem to say this, the terror attack  like the original day of infamy, which brought an end to the Great Depression  could do some economic good." He went on to note how rebuilding would stimulate the economy by business investment and job creation.

- New York Times: (October 7, 2001) - Post-terror nerves aside, what mainly ails the U.S. economy is too much of a good thing. During the bubble years businesses overspent on capital equipment; the resulting overhang of excess capacity is a drag on investment, and hence a drag on the economy as a whole.

In time this overhang will be worked off. Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. But it seems inevitable that there will also be a fiscal stimulus package

- New York Times: (Dec 28, 2001) - "The good news about the U.S. economy is that it fell into recession, but it didnt fall off a cliff. Most of the credit probably goes to the dogged optimism of American consumers, but the Feds dramatic interest rate cuts helped keep housing strong even as business investment plunged.

Granny says she ain't got dat kinda money - make dem politicians an' Wall St. bankers an' rich company owners dats been outsourcin' our jobs an' not payin' dey's fair share o' taxes pay fer gettin' us into dis mess...U.S. Debt On Track to Hit $16 Trillion Within WeekAugust 26, 2012 - The federal governments debt could hit an unprecedented $16 trillion this week while the Republican Party is holding its national convention in Tampa, Fla.in a hall that will prominently feature a running debt clock.

At the close of business on Thursday, Aug. 23, according to the U.S. Treasury, the federal governments debt stood at $15,976,519,029,144.14. That left it $23,480,970,855.86 short of the $16 trillion mark. So far in this fiscal year (from Oct. 1 through Aug. 23), the debt has grown by an average of $3,616,398,477.40 per calendar day ($1,186,178,700,586.99 divided by 328 days). Were the debt to grow at that pace in the week following last Thursdays close of $15.976 trillion, it would hit $16 trillion this Thursday--the day Mitt Romney is scheduled to give his speech accepting the Republican presidential nomination.

However, the debt does not grow in a steady, unbroken daily pace. Instead, it expands and retracts from day to day during the business week depending on the value of the bonds the U.S. Treasury sells and redeems. On a day that the Treasury derives more revenue from selling bonds than it pays out to redeem bonds, the debt increases. Last Wednesday, for example, the debt actually declined by almost $9.7 billion--from $15,970,134,937,605.00 to $15,960,468,522,111.20as the Treasury redeemed bonds of greater value than it sold. However, on Thursday, the debt increased by slightly more than $16 billion, ending that day at $15,976,519,029,144.14.

Also, the Treasury does not report the value of the debt reached at the close of any business day until 4:00 pm on the following business day. For example, the value of the governments debt as of the close of business on Friday will not be officially reported by the Treasury until 4:00 pm on Mondayand the value of the debt as of the close of business this Thursday will not be reported until 4:00 pm this Friday. Since Obama took office on Jan. 20, 2009, the debt has increased $5,349,641,980,231.06. That is as much as the entire debt accumulated by the United States from the founding of the country in 1776 until Feb. 28, 1997, when President Bill Clinton was in his second term.

Thus, under Obama, the debt has increased more than under all presidents from George Washington through George H.W. Bush combined. During President George W. Bushs two terms in office, the debt increased $4,899,100,310,608.44. That is also more than all the debt accumulated by all previous presidents from George Washington through George H.W. Bush combined. Nonetheless, the $5,349,641,980,231.06 in new debt accumulated in less than four years under Obama is more than the $4,899,100,310,608.44 in new debt accumulated in eight full years under George W. Bush. According to data reported by the IRS earlier this year, there were 81,890,189 tax returns filed for 2009 that showed taxable income. That means the total debt of the United States now equals $195,096.86 for each 2009 federal taxpayer.

U.S. Treasury officials say they still expect the government will hit the current debt borrowing limit at the end of this year. But they say they can employ "extraordinary" measures that they have used in the past to keep the government functioning until sometime early next year.

In a statement, Treasury Assistant Secretary Matthew Rutherford said that Treasury would employ the same types of procedures it has used in the past to keep borrowing under the current debt limit of $16.39 trillion. The nation's debt currently stands $16.16 trillion.

The United States has never failed to meet its debt obligations although the last battle over raising the debt limit in August 2011 went right to the last minute before a compromise was reached between the Obama administration and Congress.

Granny says, "There dey go again - gettin' us deeper an' deeper in debt...Harry Reid on Raising Debt Limit to $18.794T: Well Raise ItNovember 7, 2012 - Senate Majority Leader Harry Reid (D-Nev.) said on Wednesday that if the $16.394 current legal limit on the federal government's debt must be raised in the next few months by another $2.4 trillion, Well raise it."

That would set the debt limit at $18.794 trillion. During a Capitol Hill press conference on Wednesday, CNSNews.com asked: Senator Reid, the Treasury Department said last week that we will hit the debt ceiling again near the end of the year. Are you preparedwill you support" I dont think the debt ceiling will come after the first of the year, Reid said. But please everyone accept this: They tried it beforethey, the Republicans.

They tried it before  Were going to shut down the government, and were not going to raise the debt ceiling, he said. If they want to go through that again, fine." But were not going to be held subject to something that was done as a matter of fact in all previous administrations, Reid said.

CNSNews.com then asked, But will you support raising it by another $2.4 trillion? If it has to be raised, well raise it, he said. On Aug. 2, 2011, Congress and President Barack Obama reached a deal to raise the debt ceiling by $2.4 trillion. Now, after only 15 months, almost all of that additional borrowing authority has been exhausted, according to the U.S. Treasury Department.

CNSNews.com reported that Treasury quietly announced a week ago that it expects the federal government to hit its legal debt limit before the end of this year. "Treasury continues to expect the debt limit to be reached near the end of 2012," said the 10th paragraph of the "Quarterly Refunding Statement" put out by Assistant Secretary of the Treasury for Financial Markets Matthew Rutherford. "However, Treasury has the authority to take certain extraordinary measures to give Congress more time to act to ensure we are able to meet the legal obligations of the United States of America," the statement said.

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